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Sunday, November 16, 2008

Should or Should not the American government bail out the auto industry?

As I was going through the news on the American auto-indstry, I observed a clear division between people. One group is saying that auto-makers deserve the $25 billion subsidy but the other group is saying that instead of giving money, the policy makers should think of alternative ways such as extending unemployment benefits, cutting tax and giving high rebates to car buyers so that they become motivated to buy cars which would help the auto industry a lot. If subsidy is given then it should come with strict conditions and the industry should be watched closely. The Wall Street Journal says:

While the details of the bailout have yet to be hammered out, all signs point to loan guarantees conditioned on concessions from the stakeholders -- perhaps cuts in union and white-collar compensation, surely restructured bank debt, and maybe a shotgun wedding between Chrysler and GM. This would keep the industry alive and most of its workers employed -- for a while.

Nancy Pelosi, Speaker, United States House of Representatives, said that she had wanted a “lame-duck session of Congress” to give $25 billion to GM, Ford and Daimler-Chrysler. News Ok .com says:

Nonetheless, Washington should say no to a Detroit bailout. No to a conditions-free influx of taxpayer dollars, no to more good money after bad, no to setting a dangerous precedent that will have other struggling industries lining up at Washington’s trough.

Even if the industry recovers, the price will be very high and it will change the good relationship between Detroit and Washington and thousands of people will lose their jobs but it will at least save the industry and employments of millions of other people.

Related articles:

Wall Street Journal

News Ok

Sky News

1 comment:

  1. In the case of the auto-makers' bailout, it's a relief to have a national issue that is so straightforward: American cars tend to break down and fall apart therefore people are not buying them. If GM and Ford don't want to go out of business, they should start making decent cars. To bail them out would be to reward their terrible manufacturing standards.